Crude's black Friday blowout imperils driller budgets, RBC says

By Alex Nussbaum on 11/23/2018

NEW YORK CITY (Bloomberg) -- Oil markets are offering a “Black Friday Special” that’s probably inducing heartburn for a lot of U.S. drillers, RBC Capital Markets said.

In a late-year swoon, West Texas Intermediate crude prices are now flirting with $50 a barrel, the baseline at which larger shale explorers set their budgets for 2018, RBC analyst Scott Hanold said in a note to clients. Many smaller producers had planned for even more, he added, predicating their budgets on WTI being 10 to 15 percent above where it is now.

“Over the next three months, we expect most E&Ps to provide a 2019 budget," Hanold wrote, “and outside of a few better positioned companies, demonstrating free cash flow will be challenging at current oil prices."

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